During 2015, the Company signed MPS contracts with Top US Health Systems totaling approximately $80 million estimated to be generated over the next five years

Fiscal 2015 revenue increased 39% to $61.3 million

Fiscal 2015 net income of $1.3 million with earnings per share of $0.05, basic and diluted

Generated $2.4 million of cash flows from operations during 2015

Attained national presence with significant footprint in the Midwest, with implementations represented by 872 locations across the US

Acquired Redspin, an IT security risk assessment company with 135 hospital clients

Management Commentary

"We concluded 2015 with a strong financial performance driven by our team's exceptional operational execution with our new MPS contracts during 2015 now totaling more than $80 million in five-year recurring service revenue," said Joseph J. Flynn, President and CEO of Auxilio. "With a significant presence in the Midwest, our contracts now cover a majority of the United States positioning us with a national presence to carry us into 2016 and beyond. The fact that we were able to implement such a large number of locations last year, and to do so efficiently for our clients, has translated into invitations to bid on MPS work at new and even larger health systems," continued Flynn.

"We have utilized our position as a valued provider to healthcare systems to further advance our risk and information security offerings, and have also expanded our sales staff in order to pursue middle market opportunities, which will enable us to bundle MPS and security services. We are nearing completion of the integration process of the security businesses we acquired in early 2014 and 2015. We believe this area of our business can grow significantly due to the HIPAA compliance requirement to maintain, safe keep, transfer and secure all aspects of data, and this belief is further bolstered by a seemingly endless supply of high profile breaches and resulting large fines," said Mr. Flynn.

Financial Results for the Full Year ended December 31, 2015

For the twelve months ended December 31, 2015, the Company reported revenues of $61.3 million, an increase of 39% when compared to $44.0 million in 2014. Of this increase, approximately $8.2 million is a result of the addition of new recurring service revenue contracts in 2015. Auxilio added approximately $4.4 million in consulting revenues and software subscriptions from its newly acquired security companies. Equipment sales were $7.8 million in 2015, compared to $3.6 million in 2014, a 116% increase, with fluctuations occurring periodically due to customer equipment fleet refresh cycles that occur, on average, every five years.

Gross profit for fiscal 2015 was $10.6 million, or 17.3% of sales, compared to $8.2 million, or 18.7% of sales, for fiscal 2014. Operating expenses for fiscal 2015 were $9.6 million, compared to $6.6 million in the prior year period. Income from operations was $1.0 million for fiscal 2015, compared to income from operations of $1.7 million in fiscal 2014.

Net income for fiscal 2015 was $1.3 million, or $0.05 per share basic and diluted, compared to $1.3 million or $0.06 per share basic and diluted, in the same period in 2014.

After excluding charges of $0.4 million related to stock-based compensation and $0.5 million for amortization of intangibles, non-GAAP measure of adjusted income from operations for the twelve months ended December 31, 2015 was $1.8 million compared to $2.1 million after excluding charges of $0.3 million related to stock-based compensation and $0.1 million in amortization of intangibles in the same period of 2014.

At December 31, 2015, the Company had $6.4 million of cash and cash equivalents. Cash provided by operating activities for the twelve months ended December 31, 2015 was $2.4 million compared to $1.5 million during the same period in 2014. The Company maintains a $2.0 million accounts receivable line of credit with a commercial bank.

2016 Outlook and Events

"Momentum in our MPS business has been robust and our pipeline for new contracts is still very active. The rapid pace of implementations early last year, in addition to the recently acquired security businesses, drove revenue gains in 2015 approaching 40%. While we still expect healthy double digit revenue growth this year, top line gains will not be on pace with what we achieved in 2015. Our business will always be prone to short term spikes and periods of transition as the client life cycle runs its course. While we expect the top line growth to moderate short term in 2016, we maintain a large pipeline that remains at historic highs," said Mr. Flynn.

"As is normal in the evolution of a company, we have made the decision to reorganize our Board makeup in order to attract individuals with skill sets required at this stage of our growth and to help us deal with the opportunities and challenges we are now faced with. We are blessed to have had key individuals with healthcare services backgrounds like Bill Leonard and Brian Mulvaney and appreciated their service. As we look forward, we agreed as a Board to seek out individuals such as J.D. Abouchar who have a deep understanding of our investment space of the rapidly changing Healthcare IT industry," said Mr. Flynn.

A replay of the call will be available from 3:00pm ET on March 31, 2016 to 11:59 pm ET on April 15, 2016. To access the replay, please dial 1-877-870-5176 from the U.S. and 1-858-384-5517 from outside the U.S. The PIN is 2241813.

About Auxilio, Inc.

Since 2004, Auxilio has led the Managed Print Services industry by offering an innovative and customer driven approach for healthcare organizations. Auxilio takes full responsibility for healthcare customers' on-site print environment through situation assessment, process analysis, strategy development and program implementation. Hospitals and health systems benefit from streamlined and aligned processes and infrastructure that result in print management programs that reduce cost, increase employee productivity, and meet and exceed patient care standards.

Auxilio serves a national portfolio of nearly 220 hospital campuses and manages over 1.5 billion documents annually from over 90,000 devices, supporting over 280,000 caregivers. Auxilio's Managed Print Services' business model is vendor neutral, provides a dedicated resident team and is exclusive to the healthcare industry.

Through its Cyber Security Professional Services Group, Redspin (a subsidiary of Auxilio) provides an end-to-end security offering that specifically addresses hospital security challenges or when a breach has occurred. Redspin's fully comprehensive portfolio of services and technology includes penetration testing, HIPAA security risk assessments, security program strategy, and a SaaS technology solution, Redspin™ Risk Manager to more than 140 hospitals. This complete service offering of Redspin is unique to the marketplace and helps ensure enterprise-wide security and improved patient experiences through its ability to mitigate risk and improve efficiency across the hospital or health system.

This release contains certain forward-looking statements relating to the business of Auxilio, Inc. that can be identified by the use of forward-looking terminology such as "believes," "expects," "anticipates," "may" or similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties, including uncertainties relating to product/services development, long and uncertain sales cycles, the ability to obtain or maintain patent or other proprietary intellectual property protection, market acceptance, future capital requirements, competition from other providers, the ability of our vendors to continue supplying the company with equipment, parts, supplies and services at comparable terms and prices, expectations relating to momentum of the business, expectations of increased demand for Auxilio's services, growth of Auxilio's vertical framework, anticipated results from cross-selling efforts, growing demand for Auxilio's MPS programs, and other factors that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Certain of these risks and uncertainties are or will be described in greater detail in our Form 10-K and Form 10-Q filings with the Securities and Exchange Commission, which are available at http://www.sec.gov. Auxilio, Inc. is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

AUXILIO, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

As of December 31,

2015

2014

ASSETS

Current assets:

Cash and cash equivalents

$

6,436,732

$

4,743,395

Accounts receivable, net

7,397,957

6,808,183

Prepaid and other current assets

625,806

214,105

Supplies

1,458,609

1,066,132

Total current assets

15,919,104

12,831,815

Property and equipment, net

495,324

215,747

Deposits

58,118

34,413

Intangible assets, net

2,731,250

1,265,000

Goodwill

3,665,656

2,473,656

Total assets

$

22,869,452

$

16,820,631

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable and accrued expenses

$

8,306,860

$

7,417,361

Accrued compensation and benefits

2,856,165

1,447,132

Line of credit

-

200,000

Deferred revenue

913,677

921,771

Current portion of long-term liabilities

598,750

55,546

Total current liabilities

12,675,452

10,041,810

Long-term liabilities:

Term loan, less current portion

1,250,000

-

Notes payable to related parties, net of discount of $30,189 at December 31, 2014

-

333,534

Capital lease obligations, less current portion

125,496

49,822

Total long-term liabilities

1,375,496

383,356

Commitments and contingencies

Stockholders' equity:

Common stock, par value at $0.001, 33,333,333 shares authorized, 24,452,085 shares issued and outstanding at December 31, 2015 and 23,623,619 shares issued and outstanding at December 31, 2014

24,453

23,625

Additional paid-in capital

27,682,061

26,576,506

Accumulated deficit

(18,888,010

)

(20,204,666

)

Total stockholders' equity

8,818,504

6,395,465

Total liabilities and stockholders' equity

$

22,869,452

$

16,820,631

AUXILIO, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

Year Ended December 31,

2015

2014

Net revenues

$

61,253,853

$

44,032,076

Cost of revenues

50,664,713

35,799,726

Gross profit

10,589,140

8,232,350

Operating expenses:

Sales and marketing

2,809,377

2,125,085

General and administrative expenses

6,802,582

4,432,374

Total operating expenses

9,611,959

6,557,459

Income from operations

977,181

1,674,891

Other income (expense):

Interest expense

(127,576

)

(259,112

)

Reduction in contingent consideration in connection with acquisition of Redspin